• Europe’s financial system has avoided the worst-case scenario of severe systemic risks materialising at the same time
• Policymakers need to remain proactive and alert to financial stability risks as and when they arise
• Firmly convinced that the joint action of the EU financial stability community at large will be sustained and unwavering
• That allows the warnings issued to help avoid damage to the economy
• Full speech

There’s nothing in there on monetary policy, so carry on as you will.

This article was written by Justin Low at www.forexlive.com.

Even if we are seeing a lack of follow through after the Tuesday moves, equities are still in a comfortable spot. US futures are little changed and flattish today but it doesn’t distract from the strong gains already posted so far this week. All three major indices in the US are up 2% on the week so far. And as mentioned here yesterday, the technicals are still looking good – at least for now.

For now, cautious optimism is still prevailing as market players are sizing up what may happen next in the bond market. The rally there in the past few weeks has been helpful but amid the waves of supply still to come in Treasuries, there is still some deep-seated fear among investors that the selling could return.

This article was written by Justin Low at www.forexlive.com.

Cryptocurrency adoption
has been steadily growing in various parts of the world, with Africa emerging
as one of the regions showing significant potential for its expansion. In
recent years, countries across Africa have witnessed a surge in the interest
and usage of digital currencies. This trend can be attributed to several
factors, including economic instability, limited access to financial services,
and the potential benefits offered by cryptocurrencies.

Economic Instability

One of the primary drivers of cryptocurrency adoption in
Africa is the persistent economic instability that many countries in the region
face. Frequent inflation, volatile local currencies, and weak banking systems
have made traditional financial systems unreliable. As a result, people are
turning to cryptocurrencies as an alternative form of currency that can provide
stability and security.

Limited Access to Financial Services

Africa is home to a large unbanked population, with millions
of individuals lacking access to formal financial services. Traditional banking
systems often fail to reach remote areas, leaving people without the ability to
save money or engage in transactions. Cryptocurrencies, on the other hand, can
be accessed via mobile phones and do not require a physical presence. This
accessibility has made cryptocurrencies a viable solution for financial
inclusion, enabling individuals to participate in the global economy.

Benefits of Cryptocurrencies

Cryptocurrencies offer several advantages over traditional
payment methods, particularly for Africans. First, digital currencies
facilitate cross-border transactions without the need for intermediaries, such
as banks or remittance services. This feature is especially beneficial for
African migrants who want to send money back home quickly and at lower costs.

Second, cryptocurrencies provide a more secure and
transparent means of conducting transactions. Blockchain technology, the
underlying technology behind cryptocurrencies, ensures that each transaction is
recorded and cannot be altered. This transparency reduces the risk of fraud and
corruption, which are prevalent issues in some African countries.

Lastly, cryptocurrencies offer a store of value and
investment opportunities. With the rise in the value of popular
cryptocurrencies like Bitcoin and Ethereum, many Africans see digital assets as
a way to secure their wealth and grow their investments. This has attracted a
significant number of individuals, including tech-savvy youth and
entrepreneurs, to explore the world of cryptocurrencies.

Challenges and Future Outlook

While the adoption of cryptocurrencies in Africa is growing,
there are still challenges that need to be addressed. Regulatory frameworks for
digital currencies vary across countries, with some governments expressing
concerns about potential risks associated with their use. Additionally, there
is a need for increased education and awareness about cryptocurrencies to
ensure users understand the risks and benefits involved.

However, despite these challenges, the future outlook for
cryptocurrency adoption in Africa remains promising. The continent has
witnessed numerous innovative solutions using blockchain technology, such as
mobile payment platforms and decentralized finance applications. These
developments indicate the potential for cryptocurrencies to revolutionize
financial systems and drive economic growth across Africa.

In conclusion, the adoption of cryptocurrencies in Africa is
on the rise due to economic instability, limited access to financial services,
and the benefits offered by digital currencies. While challenges exist, the
continent shows tremendous potential for harnessing the power of
cryptocurrencies to promote financial inclusion and stimulate economic
development. As regulatory environments evolve and awareness increases, Africa
could become a major player in the global
cryptocurrency market.

This article was written by FL Contributors at www.forexlive.com.

The Dow Jones surged to new highs following the
miss in the US CPI report.
Looks like the market is still trading based on the inflation and interest
rates expectations and ignoring the softening in the labour market and growth
data. Yesterday, the US Retail Sales were
more tepid compared to the prior months, but they still came out better than
expected, and the US PPI data
missed forecasts by a big margin across the board. The bears are having a hard
time to fight this positive sentiment and perhaps it will take a clear uptrend
in the unemployment rate to switch the market’s focus.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones surged
into the key resistance at 35000
following the miss in the US CPI report. This rally looks a bit overstretched
as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move. The sellers are likely to step in around
this resistance to position for a drop back into the 34000 level.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that in case of a
pullback, the buyers might lean on the upward trendline where
they will find the blue 8 moving average for confluence. The
sellers, on the other hand, will want to see the price breaking below the
trendline to increase the bearish bets into the 34000 support.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
price is diverging with
the MACD right
at the key resistance level. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, it might be another
signal for an imminent pullback. Moreover, we can see that the buyers will also
find the 38.2% Fibonacci
retracement level for confluence around the trendline.

Upcoming Events

Today the market’s focus will be on the latest US
Jobless Claims figures given the recent softening in the labour market data.

This article was written by FL Contributors at www.forexlive.com.

Cryptocurrencies have gained significant traction in recent
years as a revolutionary form of digital
currency. They operate on decentralized networks, commonly known as
blockchains, which ensure secure and transparent transactions. However, due to
their disruptive nature and potential for illicit activities, there is a
pressing need for regulation in the cryptocurrency space. In this article, we
will explore the regulation features associated with cryptocurrencies.

Regulatory Challenges

The decentralized nature of cryptocurrencies makes it
difficult for traditional regulatory authorities to track and control their
usage. This poses several challenges, including money laundering, terrorist
financing, tax evasion, and fraud. Without proper regulation, these risks can
undermine the trust and stability of the financial system.

Anti-Money Laundering (AML) and Know Your Customer (KYC)
Regulations

To address the concerns related to money laundering and
terrorist financing, many jurisdictions have implemented Anti-Money Laundering
(AML) and Know Your Customer (KYC) regulations. These regulations require
cryptocurrency exchanges and service providers to verify the identity of their
customers and maintain records of their transactions. By following these
guidelines, authorities can trace suspicious activities and prevent illegal
practices.

Licensing and Registration

To ensure compliance with regulatory standards, some
countries have introduced licensing and registration requirements for entities
involved in cryptocurrency-related activities. These requirements vary across
jurisdictions and may include obtaining specific licenses or permits to operate
legally. By imposing such regulations, authorities aim to promote transparency,
consumer protection, and the prevention of fraudulent schemes.

Securities Regulations

In certain cases, cryptocurrencies may qualify as
securities, subjecting them to additional regulations. If a cryptocurrency is
deemed a security, it must comply with existing securities laws, including
registration with regulatory bodies and adhering to disclosure requirements.
This classification aims to protect investors from fraudulent Initial Coin
Offerings (ICOs) and other investment scams.

Tax Regulations

Governments worldwide are recognizing the need to establish
tax regulations for cryptocurrencies. Taxation policies may vary depending on
the jurisdiction, but commonly include treating cryptocurrencies as assets
subject to capital gains tax. By imposing tax regulations, authorities aim to
ensure fair and equitable treatment of cryptocurrencies in relation to
traditional forms of currency.

Investor Protection

Cryptocurrency regulations often focus on safeguarding the
interests of investors. Measures such as mandatory risk disclosures, investor
education programs, and restrictions on high-risk investments aim to protect
individuals from potential financial harm. Regulatory frameworks also aim to
prevent market manipulation, insider trading, and other fraudulent activities
that can undermine market integrity.

International Cooperation

Given the borderless nature of cryptocurrencies,
international cooperation is crucial for regulating this emerging asset class
effectively. Countries are increasingly working together and collaborating with
international organizations to develop coordinated regulatory approaches.
Forums like the Financial Action Task Force (FATF) provide a platform for
global cooperation in combating money laundering and terrorist financing
related to cryptocurrencies.

Conclusion

While the decentralized nature of cryptocurrencies
challenges traditional regulatory frameworks, governments, and regulatory
bodies around the world are recognizing the importance of establishing
regulatory guidelines for this rapidly evolving sector. Through AML and KYC
regulations, licensing and registration requirements, securities regulations,
tax regulations, investor protection measures, and international cooperation,
authorities aim to strike a balance between innovation and the prevention of
illicit activities.

With appropriate regulations in place, cryptocurrencies have
the potential to serve as a legitimate
form of digital currency, driving economic growth while ensuring security
and trust in the financial system.

This article was written by FL Contributors at www.forexlive.com.

• Prior +2.5%
• Market index vs 165.9 prior
• Purchase index vs 129.0 prior
• Refinance index vs 347.3 prior
• 30-year mortgage rate % vs 7.61% prior

This article was written by Justin Low at www.forexlive.com.

2023 was supposed to be the year of the dollar demise. Instead, things did not pan out that way as the greenback proved to be rather resilient. And so the narrative has been constantly kicked down the road for many months now but is yesterday the tell that we have finally gone past the summit on the dollar’s journey?

The market thinking now is that the Fed is done with rate hikes and that is helping to dispel some deep-seated fear that we could see interest rates hit 6%. The talk now instead is about rate cuts and traders are seeing that come as soon as June next year. It’s a rather straightforward thinking that inflation is going to progressively return to the 2% mark while the US economy achieves a soft landing and perhaps even avoid a technical recession altogether.

That’s the hope and that is what markets are pricing in at the moment.

And if things do play out that way, perhaps we have already seen the dollar go past the apex and is set to fall further going into next year. That being said, this is the same kind of naive thinking that caught traders off-guard about the supposedly imminent demise of the dollar all through this year.

Sure, we’re starting to see the dollar finally crack lower significantly but it is still trading up 14.7% higher against the yen this year, 1.1% up against the loonie, 4.3% up against the aussie, and 4.8% up against the kiwi. It is only European currencies that have outperformed the dollar in any way and a large part of that is thanks to gains in the last two weeks. If you put that aside, the dollar has held up rather well against all the calls of it set to fall apart since the end of last year already.

So, is there a chance that traders might get blindsided by the greenback again?

I would say the odds of that is lower this time around but the current market positioning is a dangerous one that could result in squeezes.

The dollar might not be in a good spot technically at the moment (as outlined earlier via EUR/USD, AUD/USD, and GBP/USD) and could be set for a further decline in the near-term.

But in the overall picture, the US economy continues to outshine its peers and the Fed looks most likely to be in a stronger position to keep rates higher for longer than other major central banks. And when you throw in the fact that Treasury yields are likely to stay underpinned amid the waves of supply coming through, a reversal in the bond market may not be too forceful given a counter-force that will warrant selling pressures.

All of that are supportive factors for the dollar to some extent and depending on how the market focus shifts and what the data tells us, it will offer traders some clues on the degree of resilience that we might see in the greenback heading into next year.

To summarise, yes we might be past the summit already for the dollar’s climb higher. However, to say that we will see a protracted and steep decline in the greenback next is to think that the market isn’t going to throw you any curveballs along the way. And as we already have seen this year, that’s not exactly how things work most of the time.

This article was written by Justin Low at www.forexlive.com.

GBP

• The BoE kept interest rates
  unchanged as expected at the last meeting.
• The central bank is leaning towards
  keeping interest rates “higher for longer”, although it keeps a door open for
  further tightening if inflationary pressures were to be more persistent.
• BoE Governor Bailey repeated that
  they will keep rates high for long enough to get inflation back to target.
• The latest employment report beat
  expectations across the board with the unemployment rate ticking lower and wage
  growth ticking higher.
• The UK CPI today missed expectations
  across the board which favours the BoE’s “on hold” stance.
• The UK PMIs showed further
  contraction in the services sector, which accounts for 80% of UK’s economic
  activity.
• The market doesn’t expect the BoE to
  hike anymore.

JPY

• The BoJ kept its monetary policy basically
  unchanged but formally widened the YCC to 1% on the 10-year JGBs stating that
  it will be a reference cap.
• Governor Ueda repeated once again
  that they won’t hesitate to take easing measures if needed and that they are
  not foreseeing sustainable price increases.
• The recent Japanese CPI showed that inflationary pressures remain high with
  the core-core reading hovering at the cycle highs.
• The Unemployment Rate remained
  unchanged near cycle lows.
• The Japanese Manufacturing PMI
  matched the prior reading remaining in contraction with the Services PMI
  falling but holding on in expansion.
• The latest Japanese wage data beat
  expectations. As a reminder the BoJ is focusing on wage growth to decide
  whether to tweak its monetary policy.
• The market expects the BoJ to keep
  interest rates unchanged at the next meeting as well.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY broke
above the key resistance around the 183.70 level and continued higher targeting
the high. The pair yesterday broke right through the high following the miss in
the US CPI data which weakened the USD across the board and strengthened the
other currencies.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective the buyers will be better off waiting for a pullback
into the trendline where they will also find the confluence with the broken
high, the 38.2% Fibonacci retracement level and the red 21 moving average. This
is where the buyers should step in with a defined risk below the trendline to
position for another rally into new highs.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bullish setup with the support zones marked with green boxes. Given
that there’s also a good support around the 61.8% Fibonacci retracement level,
the buyers might want to split their long position in half and place orders
both at the 38.2% and the 61.8% Fibonacci retracement levels. The sellers, on
the other hand, will want to see the price breaking below the trendline to
invalidate the bullish setup and position for a drop into the 183.50 level.

Upcoming Events

Today, we have the US
Retail Sales and PPI data with the market likely giving more importance to the
Retail Sales data. Tomorrow, we will see the latest US Jobless Claims figures
where the market will want to see how fast the labour market is softening.
Finally, on Friday we conclude with the UK Retail Sales figures.

This article was written by FL Contributors at www.forexlive.com.

• 2023 economic growth forecast lowered to 0.6% from 0.8% previously
• 2024 economic growth forecast seen at 1.2%, then 1.6% in 2025
• 2023 inflation forecast seen at 5.6%, then 3.2% in 2024, then 2.2% in 2025
• High inflation, interest rates, and weaker external demand took a heavier toll on growth than anticipated

The Commission said that while the economy is to grow more slowly this year, a technical recession should be avoided. Adding that „economic activity is expected to gradually pick up as consumption recovers on the back of a steadily robust labour market, sustained wage growth and continued easing of inflation“.

This article was written by Justin Low at www.forexlive.com.

• Prior €6.7 billion

The year-to-date euro area trade balance is seen at €16.3 billion and that marks a drastic improvement to last year, which was a deficit of €278.3 billion (which was heavily impacted by high energy imports).

This article was written by Justin Low at www.forexlive.com.